Is Costa Rica Office Market Nearing Saturation?

(QCOSTARICA) With a 10% plus vacancy rate, the threshold for defining market saturation, experts are expressing concern, as real estate funds are finding greater opportunities in commercial and industrial projects, while the office market is undergoing “a period of caution”.

In report by La Nacion, Randall Fernández, manager of Colliers International, said “… because of this, real estate office development in Costa Rica is becoming segmented, both geographically and functionally, where there are a lot of projects, but supply is more strategic.”

According to the Colliers report, office space on the west side of San Jose (Escazu, Santa Ana, etc) is being used by the corporate sector, while Heredia, for services and downtown San Jose, the institutional sector.

The data submitted by Colliers shows that the office market in Costa Rica is saturating with under construction projects in the first quarter of the year of 62,286 square metres (670,000 square feet), some 8.7% below the same period last year.

Antonio Perez, manager of Multifondos, said important is diversification, with investments in health, commerce, industry and various sectors; and not just focus on offices.

Unlike the office space market, the vacancy rate in commercial space is only 5.7%. “Investing in commercial development is something intelligent and can continue to do,” Fernandez said.

On the industrial side, the total inventory is also growing and currently stands at more than two million square metres, with a growth of 6.81%.

The Colliers report indicates that growth in the commercial niche is up 24% in the first quarter of 2016, over the same period last year.